Dive Brief:
- Growing investment in coal-based steelmaking capacity is outpacing the industry’s transition to low-emissions alternatives, such as electric arc furnaces, threatening global efforts to reach net zero goals, an energy watchdog group said.
- Steel producers plan to bring online 319 million tonnes per annum of new coal-based blast furnace capacity, a 5% increase from the previous year, according to the Global Energy Monitor’s sixth annual report, published Monday. They also plan to reline, or refurbish, 80 MTPA of existing blast furnace capacity.
- Those efforts dwarf the amount of blast furnace capacity scheduled to retire as investment in EAF steelmaking begins to plateau. “We are not moving fast enough toward decarbonization to meet net zero goals,” said Astrid Grigsby-Schulte, project manager of GEM’s global iron and steel tracker and author of the report.
Dive Insight:
The share of global EAF steelmaking capacity grew by 1% over the past year to 34%, according to GEM’s report. Emissions-heavy blast furnaces comprise the remaining 66% of global steelmaking capacity.
In ironmaking, just 10% of capacity comes from direct reduced iron facilities, which emit fewer emissions than blast furnace technology, according to the report. And roughly 2% of that DRI capacity uses net-zero compatible green hydrogen as a reductant instead of fossil fuels.
Under the Biden Administration, the Department of Energy sought to make the U.S. steel sector net zero by 2050, a plan that assumed less than 10% of steel would be produced by blast furnaces.
“We are generally making slow, steady progress toward the transition,” Grigsby-Schulte said, but recent developments in blast furnace capacity are “a little disheartening.”
Policy shifts are part of what’s driving the move back to coal-based technologies, while steel companies with slim margins simultaneously navigate a dynamic market environment.
“You need the energy infrastructure to be there, and you need demand-side incentives, but most importantly, you need corporate ambition in order to make that happen,” Grigsby-Schulte said.
In general, the United States has a low emissions profile compared to steelmaking powerhouses such as China and India, which are responsible for 86% of the new coal-based capacity.
The U.S. has some of the world’s oldest blast furnaces and over the years came to rely on scrap and EAF capacity for steel production, Grigsby-Schulte said. Nearly 75% of U.S. steel capacity uses EAF, according to GEM, and the country is the world’s third-largest steel producer.
“That’s a good thing,” she said. “The negative is that in the last year, it’s been kind of a decisive shift backward in terms of that progress.”
Last year, U.S. Steel received approval from its board of directors to invest $350 million to reline its largest blast furnace at Gary Works in Indiana. It also restarted a blast furnace at Granite City Works in Illinois in late March.
Comparatively, the company in recent weeks said it will invest $1.9 billion to build a DRI plant at its Big River Steel Works location in Osceola, Arkansas. DRI facilities are considered to be more sustainable than blast furnaces.
Last summer, Cleveland-Cliffs scrapped its plans to install two EAFs and a DRI plant in Middletown, Ohio, citing delays in hydrogen production and pending Trump administration policies, Canary Media reported. The project previously received up to $500 million in support from the Biden administration’s Energy Department.